Re Ioannis Aroutsidis; Sophia Aroutsidis; Savvas Pozoglou and Angela Pozoglou v Illawarra Nominees Pty Limited; Christopher E Clayton and South Wind Holdings Pty Limited [1990] FCA 48 (26 February 1990)

FEDERAL COURT OF AUSTRALIA

Re: IOANNIS AROUTSIDIS; SOPHIA AROUTSIDIS; SAVVAS POZOGLOU and ANGELA
POZOGLOU
And: ILLAWARRA NOMINEES PTY LIMITED; CHRISTOPHER E. CLAYTON and SOUTH WIND
HOLDINGS PTY LIMITED
No. G299 of 1987
Fed No. 74
Trade Practices - Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Hill J.(1)

CATCHWORDS

Trade Practices - Abandonment of claim under Trade Practices Act due to expiration of time limit - Claim for damages for fraudulent misrepresentation - whether representations were made by respondent that were fraudulently false or were made with reckless indifference as to their truth or falsity - recovery of damages - failure of applicant to establish requisite causal link between loss and any alleged misrepresentation.

Practice and Procedure - Admission of "similar fact" evidence in criminal and civil cases - discussion of principles.

Trade Practices Act 1975: ss.52, 82(1) and 82(2)

HEARING

SYDNEY
26:2:1990

Counsel and Solicitors Mr L S Einstein instructed by for Applicant: Messrs Webster Mottee & Co

Counsel and Solicitors Mr L G Foster instructed by for Respondent: Messrs Murray Stewart & Fogarty

ORDER

The application be dismissed.

The applicants pay the costs of the second and third respondents.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

Sometime in October 1983 the applicants, Mr and Mrs Aroutsidis and Mr and Mrs Pozoglou entered into a six year lease of shop premises in the Piccadilly Plaza Shopping Centre, which Centre fronts on to Crown Street Wollongong. The lease bears the date 7 December 1983.

2. The Centre is adjacent to, but not connected by a walk-way with, the railway station in that city.

3. The owner of the Centre, Illawarra Nominees Pty Limited ("the lessor") undertook in 1983 a substantial refit of the shopping Centre and in September 1983 that refitting was still in progress and the Centre was empty. The plans prepared by the lessor for the refitted Centre showed shops 53 and 54 as the site of two small shops and it was that site which was amalgamated by the applicants and fitted out as a delicatessen shop from which the applicants traded in partnership from the official opening of the Centre on 8 December 1983 until they vacated possession in September 1986. Their trading in this period was not successful and they claimed to have incurred losses in carrying on the delicatessen business totalling in the period some $45,459. On vacating the premises the applicants were required to pay moneys to a finance company from which they had leased plant and equipment used in the business and incurred interest on their overdrawn bank account arising from their unprofitable trading. The total of the losses which the applicants claimed to have suffered was said to be $107,474.

4. The applicants seek in these proceedings to recover these losses from Mr Clayton who was the second respondent in the proceedings and who is hereafter referred to as "the respondent". The proceedings, which were commenced in July 1987 were originally brought as well against the lessor but early in the hearing the proceedings against the lessor were by consent discontinued. In August 1989, South Wind Holdings Pty Limited, which company apparently employed the respondent, was added as a party. However the applicants' "re-amended statement of claim" filed in Court at the commencement of the hearing made no allegations against that company and the case was argued without reference to it. I propose to say no more about that company and to treat the claim as solely one against the respondent.

5. The applicants' case as pleaded in the re-amended statement of claim was based initially upon ss.52 and 82(1) of the Trade Practices Act 1974 (Cth). Alternatively the claim was pleaded in negligence as well as for damages for fraudulent misrepresentations made by the respondent. The claim under the Trade Practices Act was objected to by the respondent on the basis that the action had been commenced later than the period of three years from the date on which the applicants' cause of action, if any, arose: s.82(2) of that Act. Faced with the decision of the Full Court of this Court in Jobbins v. Capel Court Corporation Ltd (unreported) 21 December 1989, counsel for the applicants properly abandoned the claim under that Act. The claim in negligence was also abandoned. In the result the applicants' case was put solely on the basis that the losses they claimed to have suffered arose from certain misrepresentations alleged to have been made by the respondent and relied upon by the applicants, inducing them to enter into the lease and associated contracts and commence trading in partnership. It was the applicants' case that the representations were fraudulently false or made with reckless indifference as to their truth or falsity.

6. The representations relied upon, as stated in the applicants' re-amended statement of claim, were as follows:

"(a) The Centre was 85% leased.
(b) All food shops would be situated on the bottom
or car park level, with the exception of a
Cafe.
(c) The shops which would occupy the bottom level
were to be:
(i) French Donut Shop
(ii) Bakery
(iii) Jeanery store
(iv) Fresh fish shop
(v) Chicken shop
(vi) Fish and chip shop
(vii) Kebab shop
(viii) Sport shop
(ix) Butcher
(x) Cafe
(xi) Fruit shop
and the Delicatessen.
(d) All of the above shops would be ready for
trading on the opening day of the Centre,
namely 8 December 1983.
(e) In February 1984 construction work would
commence for the erection of a walk-way
between the Wollongong Railway Station and the
Centre to enable direct access between the
Station and the Centre.
(f) There were three other prospective tenants who
were interested in opening a Delicatessen in
the Centre."

7. According to particulars given in the re-amended statement of claim the representations, in so far as they were oral, were said to have been made by the respondent to Mr and Mrs Aroutsidis on three occasions; first at the respondent's office, then at the Centre in the presence of a Mr Rowles, who was the Centre Manager employed by the lessor, and finally again at the respondent's office which was apparently just across the street from the Centre. It was pleaded that in so far as the representations were written they were contained in a floor plan of the Centre shown to Mr and Mrs Aroutsidis by the respondent in early October 1983. No such plan was adduced in evidence and no suggestion was made in the evidence of any such plan having been shown to Mr and Mrs Aroutsidis in October 1983 or at any other time. Accordingly, the applicants' case rested upon the oral representations said to have been made by the respondent to Mr and Mrs Aroutsidis. Counsel for the applicants in his closing address conceded that he relied only upon two of the representations referred to in the re-amended statement of claim, namely that the Centre was 85 per cent leased and that a walk-way was to be constructed to join the Centre to the Wollongong Railway Station, work to be commenced in February 1984. Hence the issues between the parties were substantially reduced. Further, it was common ground, that if the representations had been made as alleged by the applicants, they were false.

8. Evidence was adduced from each of the applicants by affidavit supplemented by oral evidence. Each of the applicants was subjected to cross-examination.

9. Mr Aroutsidis deposed in his affidavit that he met the respondent in his office following an advertisement placed by the respondent in the "Illawarra Mercury". The meeting was said in the affidavit to have taken place in October 1983. In oral evidence Mr Aroutsidis identified the advertisement as one placed in the newspaper on 5 September 1983. The advertisement invited enquiries from prospective lessees for a number of shops said in the advertisement to be "still available". The advertisement indicated that the shopping complex was due to open in early November 1983 following the completion of a $2,000,000 refit and that the following types of shops were still required:

"Chemist
Men's/Ladies' Fashion
Shoe Store
Mr Fix-it
Gifts; Books and Cards
Record BAR and Music Store
Delicatessen
Maternity Wear
Coffee Lounge
Chicken Shop
Fish and Chips
Hardware
Take Away Food Bar
Health Food"

Apart from Mrs Aroutsidis, whose affidavit placed the conversation in either September or October, the other applicants (in their affidavits) all placed the conversation in October. Evidence filed by the lessor prior to the proceedings being commenced made it clear that the meeting had to have occurred no later than 13 September 1983 and in fact the lease may well have been executed around 7 October 1983 and the fit-out by the applicants of the premises for a delicatessen shop begun by 11 October 1983.

10. Mr Aroutsidis' English was far from fluent. He appeared to have considerable difficulty in comprehending the questions put to him although at times he gave the appearance of understanding far more than he wished to convey. I formed the view of him that while his English was clearly not good, he was in part at least, seeking to hide behind his disability to avoid answering directly questions which he found difficult.

11. In his affidavit, Mr Aroutsidis, contrary to what was alleged in the re-amended statement of claim filed at the commencement of the hearing, deposed that the representations complained of had been made by the respondent on inspection of the Centre with Mr and Mrs Aroutsidis and not as well at the office of the respondent. According to Mr Aroutsidis he met the respondent at his office, had a brief conversation in which he disclosed an interest in setting up a delicatessen shop in the Centre and then went with the respondent to the Centre. They initially, he said, went to the first floor of the Centre which is apparently on street level and the respondent introduced him to a Mr Rowles as the Centre Manager. The affidavit implies that Mr Rowles and the respondent then inspected the premises with Mr and Mrs Aroutsidis.

12. On the first floor of the Centre was an area to be leased by G J Coles Ltd. Mr Aroutsidis said that he indicated to the respondent that he wished to set up his delicatessen shop next to Coles but that the respondent had advised him that was impossible. According to Mr Aroutsidis' affidavit the respondent said:

"You can't have any take-away food stores on the
first level because we're going to have a food hall
on the car park level, and they all have to be
there, except for one cafe which is to go up here."

13. It is then said in the affidavit that they, (by implication, Mr and Mrs Aroutsidis, Mr Rowles and the respondent), went downstairs to the next level where the respondent showed Mr Aroutsidis four or five shops saying that these were the only shops available. The respondent is then supposed to have said:

"There's going to be a walkway between the Railway
and the Centre. It's going to be connected by a
bridge. They're going to start building it in
February next year. Once that's done people will
always be going through the Centre."

The respondent then showed Mr Aroutsidis where the walk-way was to come into the Centre.

14. According to Mr Aroutsidis' affidavit, the respondent then showed Mr Aroutsidis the two shop sites (Shops 53 and 54) and indicated the rental applicable to them whereupon the respondent is alleged to have said:

"Eighty five per cent of the shops have been
leased."

The respondent is then said to have pointed to a number of shops and identified them as: a bread shop, a French donut shop, a Chinese restaurant, a cafe, a fruit shop, a kebab shop, a hamburger shop, a fish and chip shop, a fresh fish shop and a jeanery.

15. In response to a question asked by Mr Aroutsidis as to when the shopping centre would be open, the respondent, according to Mr Aroutsidis' evidence is said to have said:

"There's going to be a big opening on 8 December
with stars, Frank Arkel (the then Mayor of
Wollongong) and the television coverage."

Mr Aroutsidis is then said to have asked:

"How many shops will be open by then?"

To this the respondent is said to have replied:

"All of the shops I showed you."

16. According to his affidavit Mr Aroutsidis expressed interest in Shops 53 and 54 and there were some negotiations as to the term of a prospective lease. The conversation is then said to have ended with Mr Aroutsidis advising the respondent that he wished to discuss the matter with his partner (meaning presumably Mr Pozoglou).

17. Mr Aroutsidis' oral evidence differed in some respects from that given in his affidavit.

18. First, the oral evidence suggested that the representation that 85 per cent of the shops were leased (or perhaps the word "taken" was used) was said to have first been made in the respondent's office, repeated during the inspection of the Centre and repeated again afterwards in the respondent's office. This is thus consistent with the re-amended statement of claim but not the affidavit.

19. Second, it became clear that the introduction of Mr Rowles was a brief matter and that none of the inspection on the ground floor or the conversation took place in Mr Rowles' presence. It should be noted here that Mr Rowles denied ever meeting Mr Aroutsidis on this occasion and that the respondent in his affidavit evidence appeared to admit the possibility that a brief encounter with Mr Rowles occurred but then in his oral evidence denied that this was so. It is unnecessary to find as a fact whether this encounter took place as it plays no part in the applicants' case against the respondent. It would, of course, have been a significant matter had the proceedings against the lessor not been discontinued.

20. Third, it became clear that the advertisement from the "Illawarra Mercury" annexed to the affidavit which Mr Aroutsidis claimed to have read was not in fact the actual advertisement which he had seen but rather an advertisement of the same kind which he had obtained as a photocopy from the library. The actual advertisement, later identified, was in a quite different form to that annexed to the affidavit. It may be remarked that both advertisements however referred to the prospect of the Centre opening in November and not in December.

21. Fourth, in cross-examination, for the first time, Mr Aroutsidis volunteered that where the bridge was supposed to come across into the shopping centre there were bricks instead of tar and that, in effect, the respondent had advised him that the bricks were there because of the railway bridge which was to be built.

22. I should interpolate at this stage that the evidence indicated, from contemporaneous records and correspondence that in September 1983 negotiations were proceeding with the State Rail Authority for the building of a bridge into the shopping centre but that these negotiations ultimately broke down and as a result no such bridge was built.

23. Mrs Aroutsidis then gave evidence. Her English was quite good and she was firm in the way she gave her evidence. She had filed an affidavit in the proceedings but upon objection being taken to a part of it, she was left to give oral evidence as to what had taken place on the day of this first meeting with the respondent.

24. On her version of events no representation was made at the initial meeting with the respondent in his office. According to her evidence Mr Rowles went with Mr and Mrs Aroutsidis and the respondent downstairs and showed them the shops before leaving them alone with the respondent. She deposed that the respondent in addition to saying that 85 per cent of the shops had been leased (or "taken") had said that there were only three or four shops left on the bottom floor. In her oral evidence she made no mention at all of any representation having been made as to the building of a walk-way through from the railway station.

25. Each of Mr and Mrs Pozoglou also gave evidence. It will be recalled that they were not present at the relevant conversation. According to Mr Pozoglou, after Mr Aroutsidis had returned from the meeting with the respondent there had been a conversation in which Mr Aroutsidis had relayed to Mr Pozoglou the substance of what the respondent had said including inter alia the representations as to the Centre being 85 per cent leased and as to a walk-way being built into the Centre with work starting in February. He also repeated the representation as to the opening date of the Centre on 8 December 1983.

26. In cross-examination Mr Pozoglou agreed that he had a "very poor recollection" of what he had discussed with Mr Aroutsidis. He was cross-examined as to whether he had consulted with Mr Aroutsidis as to the terms of the conversation about which he gave evidence and gave somewhat inconsistent replies. I have no doubt from his evidence that he did discuss his affidavit with Mr Aroutsidis and that, at least in part, his evidence was based upon a reconstruction of events arising from that discussion.

27. Mrs Pozoglou filed an affidavit which was objected to and most of which was rejected. She then gave oral evidence in chief in which she said that she had seen the advertisement and had herself gone to the respondent's office the next day and had spoken to him. I might say that the respondent denied ever having seen Mrs Pozoglou prior to the hearing. According to Mrs Pozoglou the respondent said:

"...that he had a couple of people that were
interested in a delicatessen and that it was about
85 per cent leased. And I then spoke to my husband..."

Nothing in Mr Pozoglou's evidence suggested that the conversation said to have taken place with him had happened although one would have expected it to have been a very significant matter to mention, if it occurred. In further cross-examination Mrs Pozoglou suggested that she had told her counsel of this meeting at the time affidavits were prepared but that for some reason the evidence had not been included in her affidavit. She said that Mr and Mrs Aroutsidis had returned from their meeting with the respondent and told her husband and her of the representations as to the 85 per cent leasing and the walk-way.

28. It was obvious from her demeanour in the witness box and from the inherent improbability that evidence of a conversation in which one of the significant representations said to have been made was repeated to her directly by the respondent would have been excluded from her affidavit, that she was attempting to improve the applicants' case by giving the evidence which she did. Her affidavit had not dealt either with the details of the conversation that she said in her oral evidence took place between the four applicants. I am unable to accept Mrs Pozoglou's evidence that she was able to remember the conversation in the way she deposed to in the witness box. I reject her evidence entirely.

29. The respondent gave evidence denying what had been said by the applicants. According to him, he met Mr and Mrs Aroutsidis in his office and after a brief discussion of no more than five minutes in which he was advised they were interested in a delicatessen shop to be leased in the Centre he went with them across the road into the Centre. That evidence accords with Mr Aroutsidis' initial evidence and the evidence of Mrs Aroutsidis. I find that no representation at all in any way relevant to the case was made by the respondent in his office prior to the parties moving to the shopping centre.

30. According to Mr Clayton's evidence Mr and Mrs Aroutsidis and he then proceeded to the top level (Crown Street) of the Centre where Mr Aroutsidis indicated that he would like to have the delicatessen located on the top level adjoining Coles. There is to that point no conflict in the evidence. As I have already indicated, Mr Clayton ultimately denied that he had introduced Mr Rowles to the applicants.

31. While on the upper level the respondent said, and there is no dispute about this, that there was to be no other food outlet apart from a cafe at the first floor level. It should be here noted that the lessor had employed a Mr Trotter, as a consultant, to prepare a report as to the optimum location of shops in the Centre and that Mr Clayton's comments about the location of shops derived from that report.

32. The parties then proceeded to the bottom level of the Centre. According to the respondent, Mr Aroutsidis pointed to shop site 36 and indicated that he was interested in that site. Shop 36 had been designated by Mr Trotter as a butcher's shop and this was, according to Mr Clayton, explained to Mr and Mrs Aroutsidis. They then looked, according to the respondent's evidence, at the other shops and Mr Clayton took Mr and Mrs Aroutsidis to the site of Shops 53 and 54 which had been designated by Mr Trotter as the site for a delicatessen shop. According to the respondent's evidence Mr Aroutsidis asked about other tenancies and the respondent advised Mr and Mrs Aroutsidis that negotiations and finalisation of leases was taking place with prospective tenants in respect of a coffee lounge, a fruit shop, a butcher shop and a kebab shop. According to the respondent when asked about the other shops the respondent indicated to Mr and Mrs Aroutsidis what these shops were to be in accordance with Mr Trotter's plan.

33. I prefer the evidence of the respondent as to this part of the conversation. Given a long list of shops that was advertised as available, which list included, inter alia, a fish and chip shop, it seems unlikely that the respondent referred to the site of a particular shop as having been already leased as a fish and chip shop. It may well be that having regard to their obvious language difficulties, Mr and Mrs Aroutsidis believed that when the respondent pointed out shops as reserved for a particular business he was suggesting that these shops had already been leased for that purpose, but I find that Mr Clayton made no such representation.

34. The respondent in his evidence freely admitted that the question of a walk-way from the station had been discussed. According to him he advised Mr and Mrs Aroutsidis that the lessor was "negotiating with the State Rail Authority with a view to having a walk-way off the existing rail overhead walk bridge into the Centre". He denied, however, either representing that such a walk-way would be built or that construction would commence in February. The representation, if made by the respondent, that negotiations were in progress was of course true.

35. The respondent also denied saying that there was to be a big opening on 8 December with stars, Frank Arkel and television coverage. It is inherently improbable that the respondent did make this representation for two reasons. First, the advertisement, in response to which the conversation occurred, referred to an opening projected for November as did the later advertisement annexed to Mr Aroutsidis' affidavit. Second, the lessor did not determine the 8 December opening date until after 8 November 1983. Contemporaneous records of meetings, mostly attended by the respondent, made it clear that no decision was taken as to opening dates in either September or October 1983. I find that the respondent did not make any representation at all as to a December opening date.

36. The respondent also denied having made any representation to Mr and Mrs Aroutsidis as to there being 85 per cent of the shops leased.

37. Before making findings as to the two representations ultimately relied upon by the applicants, it is necessary to discuss evidence which was sought to be led from a Mr Lever and a Mr Archer. The former is a director of a tenant in the Centre, the latter is a person who with his mother runs a coffee lounge in the Centre.

38. The evidence of Mr Lever was to the effect that in early September 1983 the respondent had, in the course of negotiations, represented to him that the Centre was 90 per cent full (he originally in his affidavit said 95 per cent but changed this evidence to 90 per cent at the hearing). No reference was made by Mr Lever to any representation as to a walk-way and it can be assumed that the respondent did not make any representation to Mr Lever as to this matter.

39. Mr Archer's evidence was to the effect that the respondent in late 1983 (no precise date was fixed), represented in the course of negotiations for the lease of the coffee lounge that 95 per cent of the shops had been leased and that there was going to be a walk-way connecting the Centre to the station and that work would start in February 1984.

40. Objection was taken to the admission of this evidence on the basis that it was not logically probative of the matter at issue in the case, namely, whether the respondent had made the representations which the applicants allege that he did make in the conversation in September 1983. I allowed the evidence to be led subject to objection because it seemed to me that without further evidence and an understanding of precisely how the applicants' case was to be put it was not necessarily possible at that stage to determine whether the evidence was logically probative.

41. The principles concerning the admissibility of so called similar fact evidence in criminal cases have been the subject of considerable discussion by the High Court and can now be taken to be settled; Markby v. R [1978] HCA 29; (1978) 140 CLR 108; Perry v. The Crown [1982] HCA 75; (1982) 150 CLR 580, at 586-7, 605 and 610; Sutton v. The King [1984] HCA 5; (1984) 152 CLR 528 at 563; Hoch v. The Queen [1988] HCA 50; (1988) 81 ALR 225; Thompson v. R [1989] HCA 30; (1989) 86 ALR 1; Harriman v. R [1989] HCA 50; (1989) 88 ALR 161; S v. The Queen (unreported) High Court 21 December 1989: see too R v. Boardman (1975) AC 421. Evidence if directed to show a mere criminal propensity is not admissible. Rather the Court must keep in mind the issue to which the evidence is relevant and how the evidence tends to prove that issue, for the probative force of the evidence must be weighed against the prejudicial effect such evidence will usually have.

42. The principles involved are summarised in the joint judgment of Mason CJ, Wilson and Gaudron JJ in Hoch at 226-7 as follows:

"The basis for the admission of similar fact
evidence lies in its possessing a particular
probative value or cogency by reason that it
reveals a pattern of activity such that, if
accepted, it bears no reasonable explanation other
than the inculpation of the accused person in the
offence charged: see Dixon J's discussion (at 375)
in Martin v. Osborne [1936] HCA 23; (1936) 55 CLR 367. In that
same case Evatt J pointed out that it bears that
probative value or cogency not as a matter of
deductive logic but by reason that it allows for
'admeasuring the probability or improbability of
the fact or event in issue, if we are given the
fact or facts sought to be adduced in evidence' (at
385).
Assuming similar fact evidence to be relevant to
some issue in the trial, the criterion of its
admissibility is the strength of its probative
force: ...That strength lies in the fact, that the
evidence reveals 'striking similarities', 'unusual
features', 'underlying unity', 'system' or
'pattern' such that it raises, as a matter of
common sense and experience, the objective
improbability of some event having occurred other
than as alleged by the prosecution."

43. As their Honours point out thereafter, where the issue in a case is whether the defendant in a criminal case has committed a particular act, the evidence of a number of witnesses pertaining to other occasions when such an act was committed by the defendant is logically probative because, as Lord Wilberforce said in Boardman at 444:

"This probative force is derived, if at all, from
the circumstance that the facts testified to by the
several witnesses bear to each other such a
striking similarity that they must, when judged by
experience and common sense, either all be true, or
have arisen from a cause common to the witnesses or
from pure coincidence."

44. The same principles are applicable in civil cases, save, as Lord Denning remarked in Mood Music Publishing Co Ltd v. De Wolfe Ltd (1976) 1 Ch 119 at 127 that the courts "have not been so chary of admitting it". This may well be because the risk of prejudice and of the evidence operating unfairly to the party against whom the evidence is tendered will not generally be as great as in a civil case. Certainly the rules will be no less severe in a civil case such as a case under s.82(1) of the Trade Practices Act, than in a criminal case: see, e.g. Mister Figgins v. Centrepoint Freeholds (1981) 36 ALR 23.

45. In Mister Figgins the issue to be determined was whether an agent of the respondent had made certain representations. Evidence of eight witnesses who were tenants in the shopping centre and to whom identical representations were made was, in the circumstances of that case admitted on the ground that these other representations established a pattern which would tend to support the proof of the fact in issue (see at 30). In Boyce v. Cafred Pty Ltd (1985) 7 ATPR 40-527, Spender J rejected evidence that salesmen other than the salesman who was alleged to have made the representation in question made similar representations to other purchasers. Such evidence is clearly not logically probative of the fact that the representation was made by another salesman. Similar fact evidence was also rejected by Beaumont J in Turner v. Jenolan Investments Pty Ltd (1985) 7 ATPR 40-571, that evidence being from a number of witnesses who had dealings with Mr Londy who it was alleged had made representations of a similar kind to the representations said to have been made to the applicants. In his Honour's view that evidence was not probative of the fact in issue in respect of which it was tendered, namely the terms of the conversation between Mr Londy and the applicants. His Honour at 46,635 said:

"The position may well have been different if what
was sought to be proved was a business practice...
or a state of mind... or the identity of a party."

46. The applicants' case is here put on the basis of fraud. If it was the applicants' case that the respondent had embarked upon a course of conduct that might be described as a system or pattern, evidence of a representation said to have been made to other prospective tenants in the Centre might well have been logically probative of the making of the same representations to the applicants. Counsel for the applicants did submit that the respondent embarked upon a "system" or pattern of behaviour but when the evidence is considered it fails to support the existence of a system of representations because the representations said to have been made by the respondent to each of the two witnesses differed both as to the percentage of tenancies which the respondent was said to have alleged had been leased, and as to the question of the walk-way; that representation was said to have been made to Mr Archer but not to Mr Lever. Further, there were a great number of tenancies being negotiated by the respondent in the period around September 1983 and the fact that two only of the tenants could be found to give evidence (albeit not consistent evidence) did not suggest that any real system existed.

47. Like Beaumont J in Turner I do not think that the evidence of the two witnesses was in the circumstances logically probative of the terms of the conversation, here the conversation between the respondent and Mr and Mrs Aroutsidis. It follows in my view that the evidence was not admissible and should be rejected.

48. I should say that even if the evidence had been admitted, little, if any, weight could have been given to it. First, the evidence of Mr Lever was effectively destroyed in cross-examination. Contemporary records of the lessor made it clear that the conversation deposed to by Mr Lever took place not in September 1983 but in or around the end of November 1983 at which time Mr Lever was shown by the respondent a plan which, it would seem, accurately reflected the then state of letting. The plan distinguished those shops where leases had been executed, those shops where leases had been forwarded to prospective tenants for execution and those shops where fit-out was under way but where no leases had yet been forwarded to prospective tenants. A mere glance by Mr Lever at that plan would have disabused him of any representation such as that to which he deposed, and made it highly unlikely that the respondent would have made any such representation. Mr Lever had an axe to grind against the lessor and the respondent and I am not satisfied that any representation of the kind deposed to by him was in fact made.

49. Second, Mr Lever did not depose to any representation having been made to him about the walk-way which rather detracts from any suggestion of systematic fraud (in the legal sense) being perpetrated by the respondent.

50. Thus, had I admitted it, I would have been left with the evidence of one tenant only. Mr Archer also was disaffected but even if I had accepted his evidence, and he was certainly not shaken in cross-examination, his evidence would hardly have made it more probable than not that in one other conversation the respondent had made the representations to Mr and Mrs Aroutsidis which were alleged against him.

51. Thus, at the end of the day, the evidence as to what occurred in the conversation in September 1983 between the respondent and Mr and Mrs Aroutsidis amounts to a choice between the evidence of Mr and Mrs Aroutsidis on the one hand and the evidence of the respondent on the other.

52. As I have already pointed out, the evidence of Mr Aroutsidis had a number of quite unsatisfactory features. It was, as I have found, not to be accepted in many details, for example, the representation as to the opening date. The evidence was criticised by counsel for the respondent on the basis that it was inherently improbable that the respondent would make the representations as to the percentage of shops that had been leased and would be ready to be open in December when in a relatively short time the falsity of that representation would be quite apparent to the applicants who commenced the task of fitting out quite speedily and who were regularly on the premises throughout November 1983. This criticism is not particularly persuasive since it can be argued that the applicants were, perhaps through their deficiencies of language, unlikely to do anything about any false representation that may have been made to them. More persuasive however in leading to the conclusion that the representations were in fact not made were the inconsistencies between the evidence of Mr Aroutsidis on the one hand and the statement of claim and in the failure of Mrs Aroutsidis to allude at all in her evidence to the suggested walk-way representation and to mention the opening date representation only in cross-examination. The evidence of Mrs Pozoglou which I regard as untruthful, also lends credence to the possibility that the evidence of all of the applicants may have been fabricated.

53. One matter going to the credit of all the applicants may be mentioned. It became clear from cross-examination, that the applicants had taken moneys out of the till in running the delicatessen, a cash business, and had not properly reported their assessable income to the Commissioner of Taxation in their income tax returns. That fact, coupled with evidence of alleged misrepresentations which clearly could not have been made, lends credence to the view that the evidence of the applicants was substantially fabricated. It is clear that the applicants consulted together in the giving of their evidence and sought in their affidavit evidence to present a consistent case which disappeared once they were cross-examined.

54. I wish however to stop short of a finding that the evidence of the applicants was completely fabricated. The onus lies upon the applicants to show that the respondent did make the representations which are alleged. In a case such as the present where allegations of representations are made and denied, an applicant may satisfy the onus of proof by showing from the surrounding circumstances that it was more probable than not that the misrepresentations were in fact made. However in the circumstances of the present case the surrounding circumstances do not assist me in reaching a conclusion and I find that the applicants have not discharged the onus of showing that it is more probable than not that the respondent made the allegations alleged.

55. Having regard to my findings it is strictly unnecessary to deal further with the other matters agitated during the hearing. However, I wish to comment shortly on the evidence relating to damages, it being effectively conceded by the respondent that if the representations were in fact made, the evidence established directly or by inference, that the applicants had in fact relied upon those representations in entering the lease and the related contracts.

56. According to the profit and loss statements included in partnership income tax returns, the partnership had traded in the year ended 30 June 1984 at a profit of $692 and thereafter in the next three tax years had incurred losses of $16,577, $7,659 and $21,915 respectively, those losses being responsible for $45,459 of the losses claimed to have arisen as a result of the alleged representations. There are a number of problems with accepting these figures as contributing to the ultimate loss claimed to have been suffered by the applicants.

57. The first, and most substantial, is that Mr Aroutsidis admitted in cross-examination that moneys of an unspecified amount were taken out of the till to meet living expenses. Details of these amounts were not given to the accountant who prepared the income tax returns and the result is that it is just impossible to accept the gross sales figures shown in the returns which are the necessary starting point in the calculation of the ultimate profit or loss. Diaries were produced which showed trading figures lower than those shown in the tax returns but these diaries were infected with the same difficulty and the fact that the figures were lower than the return figures casts in any event some doubt on the accuracy of either the tax return figures or the diary figures. As I have already indicated this matter clearly adversely affected the credit of the applicants and assisted me in reaching the factual findings which I have made as to the conversations in September 1983.

58. Second, if the representation which was said to have produced the loss was that relating to the premises being 85 per cent tenanted by the opening date in December it might have been expected that when ultimately 85 per cent of the shops were tenanted the losses would be reversed and a profit thereafter emerge. However if one accepts the figures in the diaries which were shown on a daily and weekly basis as being accurate (or at least as revealing a trend in gross sales) there was no upturn in average sales after December 1984 when the evidence established that the shopping centre was 95 per cent tenanted. By way of example, weekly sales in October to early November 1984 were, in accordance with the diary, $2,162, $1,565, $2,210, $2,006 and $2,124. By comparison, in February 1985 gross takings were $2,176, $1,954, $2,210 and $1,867. Further it can be seen that the gross sales on average were higher in the period 8 December 1983 to 30 June 1984 than they were in the twelve months ended 30 June 1985 and that there was little difference in the average gross sales in the year 1986 from the average gross sales in the preceding year. Indeed, if inflation be taken into account, it would seem from the figures included in the tax returns that gross sales declined year by year in real terms. This would seem to suggest either that moneys were progressively taken from the till or that for some reason unconnected with the representation, the business of the applicants continued to decline over the period of trading.

59. Third, the sharply increased loss in the part period in the year ended 30 June 1987 was not adequately explained. The accountant responsible for the income tax returns deposed that part of the loss arose because he had taken up outstanding creditors in the final year of trading not taken up in previous years. He thought that this was about $8,100. He was unable to explain from his own knowledge what the reason for the balance of the loss was, but agreed that one of the possible causes was undeclared income.

60. Counsel for the respondent submitted that a substantial cause of the losses was that the applicants had undertaken a fit-out of the premises that was more elaborate than was necessary with the result that the applicants were committed to over $20,000 a year for lease of plant, which with rent represented the applicants' most substantial outlay and that the business simply could not afford such a level of outgoings. He pointed out that the applicants had done no feasibility study before entering the lease and financing arrangements. There is some force in this submission but it is ultimately I think an equivocal matter. If, for example, the real cause of the poor trading was the lack of a walk-way from Wollongong Station into the Centre one can with force say that the gross trading would have been expected to have been substantially greater than it was. It was the evidence that a delicatessen business depends greatly on passing trade so that if more people streamed from the station past the shop in the Centre sales should substantially increase.

61. A further submission for the respondent was that interest figures included in the expenditure contributing to the loss included interest on the private overdraft of Mr and Mrs Aroutsidis which was in existence prior to the account being used as the partnership account. There was evidence, however, that Mr Aroutsidis deposited rental cheques from the renting of an investment property in that account and it would seem more probable than not that these deposits would have quickly repaid the existing overdrawn amount. In these circumstances the overclaimed interest was probably not significant.

62. A more serious criticism of the applicants' claim was the submission that even if some of the damages could be traced to the representations alleged to have been made, the applicants did not act reasonably by continuing to trade at a loss for such a long period. The result, it is said, is that the causal chain between the loss and the misrepresentations had been lost.

63. It is clear law that consequential loss which is sufficiently direct (at least if foreseeable and there was no dispute about foreseeability in the present case) may be recoverable in tort: Gould v. Vaggelas per Gibbs CJ (1985) 157 CLR 215 at 222; Potts v. Miller [1940] HCA 43; (1940) 64 CLR 282 at 297. Thus in Doyle v. Olbey (Ironmakers) Ltd (1969) 2 QB 158, damages were awarded for losses incurred by the purchaser of a business who had in purchasing it relied on false representations and who carried on that business for three years. However, in that case there was a finding of fact by two members of the court that it was not unreasonable or unbusinesslike on the facts of that case to carry on that business for three years. Thus the trading losses flowed directly from the fraud. A purchaser forced by circumstances to continue to conduct an unprofitable business which he has purchased as a result of a fraudulent misrepresentation may nevertheless recover as damages the losses directly caused by his conduct at least during such period as is reasonably necessary to continue the business: Lubidineuse v. Bevanere Pty Ltd (1985) 7 ATPR 40-597 at 46,834 per Wilcox J.

64. In the present case it must have been clear to the applicants at the latest by the time of the opening of the Centre in December 1983 that at that date the Centre was not then 85 per cent leased. It must further have been clear by February 1984 that work had not commenced on the walk-way and presumably at some time later than that, that it never would. Yet the applicants continued to trade until 1986.

65. It can be said that the applicants had entered into the contracts for the shop fit and that they presumably hoped that they could trade out of their predicament but they showed no signs of trying to sell the business or terminate the lease for a number of years after they must have been aware that the representations (if made) were false. To continue so to do, at least after December 1984 was in my opinion unreasonable such that their losses in the later periods cannot be said to be sufficiently causally related to any misrepresentations as to be recoverable.

66. There remains the question of the plant and equipment losses. It is clear that some items of the plant and equipment were sold realising $12,450 and that this amount has been allowed as a credit in determining the losses. The evidence disclosed that there were some items of equipment that were still retained by the applicants. These included the counter display refrigerator, two stainless steel trolleys, and part at least of a clothes locker. The display counter/refrigerator had been held by the company which originally had provided it for sale for some time, but remained unsold. The point made by the respondent was that no attempt had been made to quantify the applicants' loss in this regard and in particular to obtain a valuation of the items still on hand. It may well be that the value of the display counter/refrigerator is in fact nominal but I cannot deduce this merely from the fact that it remains unsold. It may be, I do not know, that the reason it has not been sold is that the applicants have put too high a price upon it. The onus lies upon them to prove the loss if any which they have suffered.

67. In the result I am unable to quantify the loss which the applicants have suffered.

68. I would dismiss the application with costs.